Stocks log best gains in a month

NEW YORK (CNN Money) -- U.S. stocks rallied Tuesday as worries about Europe eased and investors parsed through the latest round of earnings. The day's gains were the best since March 13 for all three indexes.

The Dow Jones industrial average (INDU) added 194 points, or 1.5%. The move higher pushed the blue chip index back above 13,000, a key psychological milestone, for the first time in over a week.

The S&P 500 (SPX) gained 21 points, or 1.6%, also its best advance in a month, while the Nasdaq (COMP) moved 54 points higher, or 1.8%.

Following a 9% decline over five straight down days, shares of Apple (AAPL, Fortune 500) rebounded more than 5%. Despite its recent pullback, Apple remains one of the top-performing stocks this year, up more than 40% year-to-date. It has contributed more than 15% to the S&P 500's gains this year, according to Standard and Poor's.

Tuesday's broad market gains came as the International Monetary Fund boosted its global growth outlook to 3.5% for 2012, up slightly from a previous prediction of 3.3%.

The increase "reflects the IMF's view that the euro has stabilized since last year," wrote analysts at Wells Fargo Advisors in a research note.

The latest German economic sentiment index came in unexpectedly high, also lifting the the mood of investors, while an auction of Spanish 12- and 18-month treasury bills drew strong demand, said Markus Huber, a senior trader with TX Capital in the United Kingdom.

"It brings a bit of relief after the recent auctions have been rather worrying," he said.

On Monday,Spanish bond yields rose above 6% -- the highest level in several months, but they eased to 5.89% on Tuesday. The Spanish government, which will hold a closely watched bond auction on Thursday, has been struggling with rising borrowing costs amid fears that it may need to be bailed out.

Coca-Cola (COKE) shares rose after the company said its first-quarter earnings increased almost 8%. While the company's profit margins continued to decline due to higher costs, Coca-Cola said it is managing by taking a number of steps, including raising prices.

Johnson & Johnson (JNJ, Fortune 500) beat earnings expectations for the first quarter, butU.S. revenue declined more than 5%, sending shares lower. The company said sales of over-the-counter medicines were significantly impacted by the suspension of manufacturing at the McNeil Consumer Healthcare facility in Fort Washington, Pa.

Following the close, Yahoo pulled in 23 cents a share on $1.07 billion in sales for the first quarter. Earnings topped analyst estimates, while revenue, up a scant 1% from last year, came in as expected. Shares of Yahoo (YHOO, Fortune 500) rose 3% in after-hours trading.

IBM (IBM, Fortune 500) shares fell after the closing bell when company said its sales narrowly missed analysts' forecasts. The tech giant reported a profit of $3.1 billion, an increase of 7% versus last year, with earnings per share coming in at $2.78, above estimates of $2.65.

Economy: Before the opening bell, the Commerce Department reported that March housing starts occurred at a seasonally adjusted annual rate of 654,000, below expectations and down from February's rate of 694,000.

Building permits, an indication of future construction activity, came in at an annual rate of 747,000 last month, ahead of expectations and up from February's rate of 715,000.